Saturday, November 29, 2008

Tim Wood's Commentary

I like Tim Wood very much. He did a Market Wrap for FSO which you can see above. It may be moved to the archives, so if you get a surprise, look in TW's Archives.

Friday, November 28, 2008

T-G Post Mortem

Long time to prepare; short time to consume. Ahhh...such is Thanksgiving. In breaking with old habits, I elected to put the turkey in a little early and carve it up prior to my guests viewing the beautiful golden brown bird. I did the same with the ham. Those two tasks went a long way toward smoothing out the hard edges.

Everything was delicious, though at several times during the day I believed that the cooking gods were conspiring against me. I also managed to NOT have a sink full of dishes upon company's arrival.

I hope that you had a nice Holiday.

Thursday, November 27, 2008

Happy Thanksgiving

I've already posted my love of cooking. I'm up early this a.m. I just popped in the Maple Pecan Chocolate Tart. I realize just now that I only put two eggs (do not ask me why--I think I just forgot to go back to the fridge for the 3rd one) in it rather than three. I should not cook prior to drinking coffee. Now, I'm worried that it will not set up--likely it will not. !@#^%$.

Thankfully I had people over for dinner on Sunday, so much of my EPA cleanup is done. But with 20 feet (4 bipeds and 3 quadrupeds--I'm not counting the cats, their feet are pristine) in and out on multiple basis, dirt gets in quickly.

I normally ease into Thanksgiving by doing research trying to find at least one new dish. Not this year. I didn't even make it through the Bon Appetit Thanksgiving issue--this is where I get my new ideas generally.

I began writing this post at 6:15, thinking I would finish my coffee. Given that I was deficient on eggs, I decided to make one more dessert (now 3). It is a lemon brulee tart from John Folse's page. I did lengthen the cooking time of the maple pecan chocolate tart...and it seems to have firmed up...but I do not want any surprises. So, I have a new dish.

Looks like energy stocks are breaking out. My HERO is now positive after being sickeningly underwater--but I don't have that many shares. I did buy some {gasp!) ERX the triple bull energy. Small position. I also have a bit of CEF.

UYG is seeing some improvement as is SSO. Still mostly cash, though.

John Mauldin's letter this week is good. He opens with this quote:

"It will therefore be crucial that you see the world anew. That means looking from the outside in to reanalyze much that you have probably taken for granted. This will enable you to come to an understanding. If you fail to transcend conventional thinking at a time when conventional thinking is losing touch with reality, then you will be more likely to fall prey to an epidemic of disorientation that lies ahead. Disorientation breeds mistakes that could threaten your business, your investments and your way of life."

-- James Dale Davidson and Lord William Rees-Mogg, The Sovereign Individual, 1997

As you know, I've been pondering in this space the wisdom in conventional thinking with respect to this bear market. I felt some comfort from not only the opening quote, but also the commentary.

On Real Money, there was a link to a Peter Schiff video. That it is entitled vindication is a little misleading. While Schiff has been very prescient on the the debt crisis, and seeing that it was more than subprime (but I figured that out too!), he miscalculated the inflationary effects of the FED's response. Here is an example of paired unconventional thinking (debt bubble bursting) with conventional thinking (Fed's response would be inflationary).

These are not a right and a wrong that cancel each other out. Rather, by piling up with commodities (including PM) pre-cyclical bust, a great deal of wealth gets destroyed--no less so than had one remained exclusively in stocks. It is worth noting that commodities have fallen by 52%.

I'm not trying to be hypercritical, but rather to caution on a mixed bag of right and wrong thinking can still lead to the same result: heavy losses. Interestingly, Schiff, on his recent FSO broadcast stated that he was reminding investors that "they were investing for the long term".
I guess that is a 3rd piece of conventional thinking where Schiff is just manning another oar position as the other equity guys/gals in the same boat.

I'm in the camp of future inflation and higher interest rates....but it seems to me that it will be subject to the USD falling in value. Right now, against the other basket of currencies, it is still doing pretty well.

Much has been made of the latest Jimmy Rogers video on Bloomberg. I've not listened to it yet, but I will. You can find it here.

Enjoy your holiday!

Wednesday, November 26, 2008

Feeding Other People: The Joy of a Shared Meal

If someone were to ask me what is my favorite thing to do with other people, my simple answer would be "to feed them." For me, planning and preparing a special meal is a solitary and creative ritual. My goal is not to be lavish, but rather to be inventive. I want to prepare a meal that will both surprise and delight--not only my guests, but me. Inviting someone to your home for a meal is an act reflecting both generosity and goodwill. A shared meal provides strength and renewal not only for our bodies but for our spirits as well.

There is a sacredness to the shared meal. The preparation of the meal is a transformative process that relies on the bounty of the land, the toil of many who work to grow, harvest, deliver and package our food, and the sacrifice of an animal on whose flesh we dine. And the cook is the ultimate alchemist who transforms sometimes disparate elements into a concert of aromas, textures, colors and tastes. And to sit at the table and share in this experience requires us to set aside our differences. It is no accident that 'breaking bread' together is the ultimate in our setting aside our differences. A shared meal repairs our relationships and cements the bonds that hold us together.

I had the opportunity to go to Spain on a private group wine tour. If that sounds a bit elitist, it was my first trip to Europe, and we do not take regular vacations. It was a splurge (it was just me), and it was the first time in my life that I was away from work (highly stressful job) and family for two weeks. My mid-life flight from life! On a whim, I took a college level wine course offered through the culinary program and the community college. As it turned out, my professor (a microbiologist and a professor emeritus at the medical college) arranged wine tours every other year. It is always booked up in advance. I had a particularly bad day at work, and I jokingly asked, "Dr. F, are you sure your wine tour is filled up?" Surprisingly, he answered, "As it happens, I just had a cancellation today, but you must let me know tomorrow." I came home at 10:00 p.m. and asked my husband if he minded if I went to Sicily/Spain without him for two weeks. I had my money in Dr. F's hands the next day!

It was a lifetime experience for me. I was going on a trip with 29 other people who I did not know (except for Dr. F). We visited several wineries and the format was the same: tour of the winery accompanied by a meal featuring local food paired with the wineries offerings. While the wines and the foods were different from winery to winery there was a very distinctive similarity: the extraordinary graciousness and pride in which each wine maker owner shared his/her wines with us and the bounty of food that accompanied it.

While each meal was memorable in this regard, one stood out particularly because we were watching the food get prepared. Our meal was at the home of the wine maker, and his cook made the food and served us (with some help). She was a woman in her late fifties. She was both energetic and purposeful in her ministrations to each dish that she prepared. As she brought them to the table, she radiated joy in the simple pleasure of sharing the gift of food with us. We gave her a standing ovation at the conclusion of our meal.

I write this post on the morning of my own two day cooking odyssey to prepare a Thanksgiving meal for my family. We've a modest group. There are four of us plus two sets of grandparents. I've also invited a bachelor neighbor--a long time friend who is frequently a guest at our table. Just nine of us--I know several who have as many at 30 people. As I was in BJ's last evening securing the victuals, I paused in front of some elegant plastic plates. I went passed them. I returned to them and caressed them in my hands thinking longingly of how easy they would be to toss in the trash afterward. I put them in my cart. Two aisles later, I turned around and put them back. My meal will grace my china.

My best to you and yours as you celebrate this special day of giving thanks.

Monday, November 24, 2008

I should stay away more often!

Villedary, peintre et musicien
" La chute "

I signed off my earlier post with a hope that UYG was a beneficiary of the early morning positive futures action. It went up 27%. Yeah. I'm still underwater though. A reminder of how much ground one has to cover when a loss north of 40%.

I had enough exposure to enjoy some gain, but I was not at my desk for any of it. That's fine though. I went to the doctor with my Dad, and got some clarity an upcoming procedure he will undergo. That was a happy circumstance. Also my son got the closest thing to an all clear.

I hope that your day was a fortunate one--in and out of the market.

Morning Post

Ch. Villedary
" Résilience "

It was a very busy weekend. I invited my B/SIL over for dinner. I made homemade chicken enchiladas, Cuban beans and bread pudding. It helps to invite folks over because it forces you to clean up.

The chicken enchiladas are particularly flavorful, but they are a bit of work. It does yield two trays (about 20). I wanted to make this dish because one of the trays was going to a neighbor (S) who was hit by a drunk driver. (Fell asleep, jumped the median on the interstate and hit her). I wanted her family to have something that they could heat up easily within the next day or two. And I wanted something that would be delicious. These certainly fit the bill.

S drives an E-class Mercedes which must be a kissing cousin to a Sherman tank. The car was mangled upon recognition, and to look at it (as I was told by her husband) one would not have mustered much hope for a happy ending. As it turns out, my neighbor suffered from a dual fracture of the tibia requiring surgery and a titanium rod. She suffered no head or internal injuries. As is the case, they had an avalanche of food at the beginning. I didn't want to overwhelm them and waited a couple of weeks prior to carting stuff over.

I'll be out much of the day today. I'm going to accompany my Dad and Stepmom to the cardiologist to hear the recommendation regarding open heart surgey. My son has his final follow up with his surgeon. Hopefully he will get a full release.

The futures look good this morning. A little uncertainty has been removed, though much remains. I'm feeling a bit out of synch with 'stuff'. I think that Gary K was calling Friday Day 1 of a the countdown to follow through begins.

Nice, perhaps our UYG will get a decent lift today.

Saturday, November 22, 2008

Saturday Post--Going for Gold

I was out a good bit of the day on Friday and missed the exceptional ramp. Hell hath no fury like a trapped short!

I've been out all day today. I helped with an English Setter transport. I had Winston and Lucy. Lots of driving. I drove south to Roanoke Rapids (1.5 hours from my home), then 2.5 hours to Fredericksburg and then one hour home. It was a beautiful COLD fall day. A nice day to drive. I saw my other transport buds in Fredericksburg.

John Murphy's missive on Friday was about gold being a haven in deflationary times-NOT just a hedge against inflation. I bought a little CEF on Friday. But you may want to look at the some folks in this space, which you can do HERE.


Thursday, November 20, 2008

Market's Close

Another ugly day in the market. Louise Yamada was on Fast Money. She gave some depressing numbers for the S&P: 400-600. But, I'm not surprised, though. I mentioned in this space Tim Wood (who is on FSO regularly), and most recently his call for 50-75% retracement of the 1974 - 2007 rally.

I'm sure in the meantime, we will have some monster rallies to scare the bejeebers out of the shorts.

Oil is at $50---If you do not read Ray Merriman's posts (MMA Market Cycles), you might consider doing so. His calls have been uncanny. You don't have to believe in astrology--he could be correlating the stuff to sand grains. It doesn't really matter--what matters is that he said this year that he thought people would be surprised how low oil would go.

Dan Fitzpatrick: STock Market Mentor

I've mentioned Dan before. He has a FREE chart of the week service. They are very worthwhile--and naturally, they are well done so that you'll be enticed to sign up for his paid service. Click the above graphic to be transported.

I don't subscribe to his paid service, but I think that you'll find his presentation on the S&P and VIX interesting. Also, he is making one of subscription videos available. I urge you to view it--

Wednesday, November 19, 2008

Jousting with Windmills

Lyceum, Don Quixote
Fine Art Print
by William Nicholson Pryde
item #: 10029378A

I'm hearing more folks talking now, not of the bottom that seemed to be called with such confidence on the 'successful' retest last week, but rather of another leg down to go. Though I've never witnessed true 'capitulation', as I was only a look at my statement when I had time. But last week, I never 'felt' that we had capitulation. It is starting to feel so ominous now, that I feel that we may be due for a body blow. Perhaps I'm just projecting.

The selling today in the financial stocks was relentless. I must admit that I found it surprising. I'm also finding all of this depressing.

Tuesday, November 18, 2008

Did you know?

Giclee Print
by Minrong Wu
item #: 11729067A

I find that Bloomberg has consistently high quality interviews. Many are thought provoking--perhaps it is because they are (1) an alternative to the opinions of the guest speakers on CNBC and (2) the length of time to express those opinions is considerable longer. I think that you'll enjoy this video by Philip Manduca at ECU Group. It's a UK interview, and I found Manduca to be very clear in his opinion. Because his fund takes debt and dominates it in different currencies, he is focused on relative valuation of currencies. If you have 15 minutes or so, I think that you'll find the interview interesting, and give you some points for consideration as you consider how to navigate the upcoming horizon. You can find it here.

New Levered ETF's. There are some new ways to both make and lose money and warp speed. It is through the Direxion ETF's that were recently launched. Below is a table with the new funds. These funds have already become very popular with BGU trading just north of 5M shares yesterday.

As you might imagine, these funds in these markets are quite volatile. Here is FAZ the Financial Bear fund:

And, if you are a Buffeteer on his money making ship, then you have been called to task in bailing the water that the ship has taken on:

The CDS spreads on Bershire debt have widened considerably. This stock has lost almost one third of its value.

Shaken, Not stirred.

by John Audubon
item #: 11726055A

Yesterday I conquered the leaves at my home. When armed with a back pack leaf blower, it was easier than had I had a rake as my weapon. We lit them off in the cool evening. But after 3 hours, I was tired of constant motion between blowing and raking, I slept very soundly. I'm pleasantly sore this morning.

I turned on the TV at a.m. :and saw a fund manager (Invesco) stating emphatically that investors should not let themselves be shaken out of this market. I was still half asleep--so much so that I managed to make coffee without the coffee. As the maker started its brewing cycle, it occurred to me that I had no memory of putting in the grounds....reset. Start over.

The picture of the crane looming over the poor hapless reptile reminds me of how the current market is looming over investors. While I felt somewhat prepared for the unfolding of events--and even had conviction about the nature and direction of those events--now that they have unfolded, I realize that I underestimated the magnitude.

Rev Shark (Jim dePorre) on Real Money often says that markets go up further than you think, and they come down further than you think. That statement has been true in spades on both sides of the boom/bust. To be fair, we've not seen the end of the bust. And though I've heard it, I cannot say that I've internalized it well. Though I've had some choice short positions, I've not held onto them well. Those robust bear market rallies are very tempering!

To say that these markets are unsettling is an understatement. I admire folks who can 'trade' them. Other than very small exposures for some exposure to market direction (short/long), I have neither the experience nor the temperament to 'trade' this environment with any skill or confidence.

But to get back to the comment of "investors should not let themselves be shaken out of the market". . . . cutting one's losses is endemic to prudent (and successful) risk management and capital preservation. I find it amazing that the advice given for equities is counter to the advice that one would given in any prudent business decision.

What investors SHOULD get shaken out of is their complacency, and they should not be stirred to act in an environment where uncertainty is high and risk is not easily quantifiable.

Sunday, November 16, 2008

Serendipitous Events



" Câlin de Mère Grand "

I mentioned the Mark Taylor interview to a friend of mine via e-mail. Small world. As it turns out, Taylor is an old friend and colleague of his. He mentioned that Taylor is brilliant and that he has to work to keep up with him. My friend is brilliant and I have to work to keep up with my friend. A food chain of intellect, and I'm on the bottom rung!

I remember being in the Little Givens Bookstore in Lynchburg, picking up an old volume of George Santayana's Life of Reason. Santayana is known for several notable quotes, but I was not familiar with his work. As I opened the book, the prose was a thing of beauty. It is one of my favorite books. After pestering many folks about Santayana, I pestered my friend. As it turned out, my friend had done his masters thesis on Santayana. It's very good to have friends such as that!

I think that surrounding ourselves with different people and points of view gives us a background painted with a full palette of colors from which to (in)form our own thinking about this or that. I believe that a monochromatic background yields a monochromatic point of view. Though still pleasing to the eye, it lacks a both depth and vibrancy. I think that the internet helps with

In the Mark Taylor interview, I was interested in his reference to William Gaddis. I'm not familiar at all with William Gaddis, though William Gass--and author who I enjoy very much--has was influenced by Gaddis. But the Taylor interview provided a chance to seek out (if not superficially) Gaddis. I found this 1954 piece,

'Stop Player. Joke No. 4'

that I thought you might enjoy.

Life's intersects provide much potential to enrich our lives, so long as we don't cruise through the crossing without stopping.

Saturday, November 15, 2008

A. M. Post



Please visit the artist's website here:
" Petit Poucet "

I'm listening to Financial Sense Online. I always listen to the technical analysis. Frank Barbera is the technician this week. He's expecting a retest of the S&P in the 840-850 area next week. Hard to know what will happen in such a retest fails. If we are to believe that there is a PPT, then that failure would not be allowed to happen. But I wouldn't hang my hat on that.

My father sent me a link to the Silver Bear Cafe. The link discusses the devaluation of the dollar, and I found it a little alarming. I sometimes think that there is a cult of people that think up these things--and I'm not clever enough to know if they are correct, or if they need tin foil hats. At the very least, I believe that I should be more aware of these issues.

Surely enough, as I tuned into FSO this a.m. Jim Puplova led off with discussion about this devaluation. Peter Schiff is on there this week as well talking about inflation, deflation and hyperinflation.

These guys have been long-term investors in the natural resource and precious metals markets, and as you know those sectors have been hit hard. Naturally both Schiff and Puplova were discussing 'the long term' nature of investing in these sectors and their having to remind their investors of that. But though many of these stocks have declined markedly (50-90%).

If you have time, I think that you will it a good use of your time to listen to Mark Taylor's interview. It is one of the most interesting things that I've listened to in a long time--it blends so many 'systems' together--and it reminds me of why I've been scratching my head through all of this 'stuff'.

To say that what we are seeing is unsettling is an understatement. And I'm increasingly unnerved that our "prevailing wisdom" that dictates how we respond to these issues is no longer valid.

Thursday, November 13, 2008

Market Close

As you can see from the charts, I unleashed my proprietary algorithms and was able to trigger an orgy of buying! Some our billing today as a successful retest of the lows---the fullness of time. And perhaps the fullness of the moon has contributed to such mischief!

But the market will always surprise the most number of people! There was a treasury auction and that was not terribly successful. Perhaps the bubble in bonds is conflating a bit, and money is moving into a a very oversold market.

At any rate, these moves appear to trigger stop losses (for both the longs and the shorts), and the result is: mayhem.

I did a little "Custer" trade. WCG, a stock that I've been watching, had a major meltdown. I almost bought it at $19 or so. Well, I thought that it was a real bargain an 11.12, and when it went down to six and change I thought....well, left unsaid! But it recovered, and my position was small. I'm still holding.

Best/Worst 10 Industries for the last 3 months

Here's a view of top and bottom industries for the last three months. Formatting is a little iffy, but........

T H U R S D A Y , N O V E M B E R 1 3 , 2 0 0 8

3 month
Top Performer

DJ US Electricity Index (7530)

Last: 136.41
Percent Change: -2.84%

Select the performance time period to sort
the best and worst performers listed below:

10 Best Performing Industries
Industry NamePercent Change (over time selected)
DJ US Electricity Index8.13%
DJ US Aerospace & Defense Index4.22%
DJ US Water Index3.90%
DJ US Forestry Index0.00%
DJ US Brewers Index-4.70%
DJ US Nondurable Household Products...-11.96%
DJ U.S. Household Goods & Home Cons...-18.28%
DJ US Waste & Disposal Services Ind...-19.92%
DJ US Fixed Line Telecommunications...-20.13%
DJ US Beverages Index-20.36%

10 Worst Performing Industries
Industry NamePercent Change (over time selected)
DJ US Full Line Insurance Index-89.24%
DJ US Mortgage Finance Index-80.69%
DJ US Platinum & Precious Metals In...-79.42%
DJ US Tires Index-71.71%
DJ US Nonferrous Metals Index-68.65%
DJ US Aluminum Index-68.10%
DJ U.S. Industrial Metals & Mining...-67.59%
DJ U.S. Iron & Steel Index-66.71%
DJ US Mobile Telecommunications Ind...-66.66%
DJ US Coal Index-66.38%